Some major American companies are announcing that they want to share the tax benefits they will get under the revised plan recently passed by Congress along with their employees. Analyses of the new tax plan show that the largest taxpayers, which include the companies, will reap the greatest relief, while middle- and lower-class taxpayers will see little effect.
AT&T, Comcast, Wells Fargo and Boeing are among the companies that have announced their intention to find ways to share the benefit with their employees.
Skeptics say such moves amount to public relations gestures, token steps to take the sting out of what they see as the inequitable rearrangement of tax brackets. The amount of money the companies will pass along to employees is a drop in the bucket in comparison to what they will acquire under the new law, they say.
The stock market reflects that sentiment. It has risen since the law passed, based on the premise that the savings will go to investors rather than to workers. The expectation is that the tax revisions will lead to higher profits, bigger dividend payments and share buybacks.
The revised tax plan reduced the corporate rate from 35 percent to 21 percent. It also created a provision that would exclude many foreign profits from taxation, another break for many of the large companies.
AT&T announced that it will pay a $1,000 bonus to each of its 200,000 workers once the law becomes effective. President Trump praised the action. But the token of generosity came when the Justice Department is suing to block a proposed merger between AT&T and Time Warner. Trump has declared that such merger of the communications giants would be bad for the country. The president said AT&T’s gesture is an indication that the $1.5 trillion tax cut will trickle down to the middle classes.
It is anticipated that other companies may jump on the bandwagon, coming up with ideas about how they can share the windfall they will reap from the new tax laws. Comcast already has announced it will follow AT&T’s lead in offering $1,000 bonuses to more than 100,000 employees. Wells Fargo has taken a different approach, raising its minimum wage to $15 per hour. The banking firm also will donate $400 million to charitable and community organizations.
Boeing’s plan is to put $300 million into enhanced job training, facility upgrades and charitable efforts.
But overall, such schemes to share the windfall with employees will remain “the exception, not the rule,” according to Senate Minority Leader Chuck Schumer.
As the Institute on Taxation and Economic Policy, a liberal watchdog organization noted, many of the large corporations have been holding large cash holdings for years that could have gone to workers. Boeing, for example, had $8.8 billion at the end of 2016. The company could have made a goodwill effort for employees at any time, the institute said.
Another indication that the large corporations recognize the huge benefit they will realize is the announcement of share buybacks amounting to $83.7 billion, Schumer’s office reported.